Life Insurance Proceeds: Are Death Benefits Exempt
A husband purchased a large life insurance policy naming his wife as beneficiary. The policy accumulated cash value. The husband and wife had joint creditors. The husband died and the insurance company paid the policy proceeds to the surviving spouse. The surviving wife asked me if the creditors can go after the life insurance proceeds
The insurance policy was exempt from creditors during the husband's lifetime. Cash value of life insurance is exempt under Florida statutes. The death benefit is exempt from the husband's creditors after his death. The proceeds once paid to the surviving spouse are not exempt. The Florida statutes do not protect the proceeds of life insurance (contrast to the protection of annuity proceeds in whatever form). I believe the joint creditors and the wife's individual creditors, if any, can levy upon the life insurance death benefit proceeds once paid to the survivor.
posted by Jonathan Alper, asset protection and bankruptcy attorney, Orlando, Florida
i believe that happened to one of my friends once. she lived in florida for 20 years. they tried to go after her proceeds for some reason or another. i think she she moved to california and got a globe death insurance policy. i don't think she had the same problems with Globe.
Then, if a husband and wife are anticipating a judgement against both of them, and there are life insurance policies, with each other as beneficiaries - should the beneficiaries be changed to the adult chidren? Or can they? Is there any problem with this?
What if the couple separate them selves. What is going to happen to their insurance?
I believe that life insurance is meant to cover debts, expenses of the family in case of the spouse passing away. I don't see why the beneficiary spouse should try to evade paying them. The Florida law is in line with the ethical responsibilities.